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Morning Headlamp - Tax Proposals Receive Frosty Reception from Taxpayers, Businesses

Punish the producers seems to be the mantra in Juneau


Gov. Bill Walker's proposal to triple the state's jet fuel and aviation gasoline taxes by 2018 was met with a chilly reception by some of Alaska's largest air carriers. If enacted by the Legislature, the proposed taxes in House Bill 60 and Senate Bill 25 would raise up to $80 million more per year by increasing state taxes on all motor fuels — gasoline and marine diesel as well as aviation fuel.  Alaska Airlines regional vice president Marilyn Romano said the company's own calculations indicate that Alaska Airlines alone would pay 45 percent of all new taxes collected if either HB 60 or SB 25 pass the Legislature.


As Winston Churchill once said, "There is no such thing as a good tax." You might not be surprised to hear that consumers ends up paying for increases to motor fuel taxes in the end. Researchers at the National Bureau of Economic Research found in "both federal and state diesel and gasoline taxes [are fully passed on] to consumers... [and] are reflected immediately in retail prices."


Following public backlash against a new proposed studded tire tax, Sen. Cathy Giessel, R-Anchorage, has scaled back her proposal. Giessel's original legislation would have increased the state user fee to $75 a tire, up the current $5 fee, or $300 for a set of four instead of the current $20. In a new "sponsor substitute" introduced Wednesday, Giessel is now calling for a $50 tax instead — or $200 for a full set, which would come on top of a $2.50 fee for all tires – studded or non-studded.


Taxes, taxes, and more taxes. Anchorage Democrat Les Gara debuted his bill, called the "Fair Share for Alaska's Oil Act," on Wednesday, calling for an increase in the state's current minimum oil tax, from 4 percent up to 10 percent, as oil prices rise.


Headlamp is disappointed as Rep. Gara had just acknowledged in his constituent newsletter that taxing the oil industry more would not solve the budget problem. On February 13, 2017 Gara penned the following: "I want a much fairer share for our oil, but that's not a deficit-eraser unless we adopt taxes so high they ensure oil companies lose billions a year." Headlamp notes that Gara's bill has not yet been read across the House floor, and therefore technically does not exist or have a bill number.


Permanent fund dividends are at risk if the state doesn't get its fiscal house in order. According to


Legislative Finance Director David Teal, by 2027, whether Alaskans receive Permanent Fund dividends each year would depend on annual Fund earnings. The House Finance Committee will hear public testimony on the proposed income tax and Permanent Fund bill (HB 115) on Friday.


Punish the producers seems to be the mantra in Juneau. Robert Dillon, Vice President of Communications for the American Council for Capital Formation, writes that increasing the tax burden on the government's number one source of revenue when the industry is struggling with declining production, increased regulatory costs, and falling profits is likely to collect less, not more for the state's treasury.


Staff at the EPA have been told that President Donald Trump is preparing a number of executive orders related to the agency which will be signed once the new administrator is confirmed. Trump has promised to cut U.S. environmental regulation as a way to bolster the drilling and coal mining industries, but has vowed to do so without compromising air and water quality.


The Alaska Gasline Port Authority (AGPA) wants federal regulators and state proponents of a large natural gas pipeline project to conduct a new assessment with Valdez as the terminus for the pipeline. AGPA is seeking this despite a determination made in 2013 that the Alaska LNG Project will terminate at a port facility in Nikiski. North Slope producers have purchased about 650 acres of land in Nikiski to site the massive natural gas liquefaction plant and marine export terminal. AGDC is now negotiating an access agreement for the producers' property and the key LNG export permits tied to the Nikiski location.


First Reads

Tax hike idea gets a turbulent reception from big airlines       

Juneau Empire, James Brooks, February 15, 2017

Anchorage GOP Sen. Giessel scales back her fee hike for studded tires

Alaska Dispatch News, Nathaniel Herz, February 15, 2017

Reserves, dividends would be gone in 10 years without action, lawmakers told

KTOO, Andrew Kitchenman, February 15, 2017

New bill from House lawmaker would hike minimum tax on oil industry

KTOO, Rashah McChesney, February 15, 2017

Increasing Taxes on Alaska Oil Producers Might Not Go Well

Real Clear Energy, Robert Dillon, February 16, 2017

U.S. EPA staff told to prepare for Trump executive orders -sources

Reuters, February 15, 2017

Port Authority resurfaces seeking Valdez route

Alaska Journal of Commerce, Elwood Brehmer, February 16, 2017

Group unveils video and intent to sue Hilcorp for Cook Inlet natural gas leak

Alaska Dispatch News, Alex DeMarban, February 16, 2017

AK Headlamp
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Anchorage, AK 99503

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